Joint Venture Registration in India

When a foreign company wants to set up business in India in the form of incorporated entity, one of the options available for doing so is in the form of Joint Venture Registration in India. Other options available for foreign company registration in Indiaare:

 

•  Subsidiary company registration in India and 
•  Limited liability partnership.

 

Foreign companies can  establish a Joint Venture with Indian companies and make investment in same. Foreign companies can also contribute capital, infrastructure, knowledge, technology etc. It can be set up as an entirely new company in India with an Indian partner or it may involve investing in a company which is already existing in India. Joint venture registration can be in the form of Private limited company registration or public limited company registration. 

Permissible activities for Joint Ventures in India

 

1. Subject to FDI guidelines, Joint Ventures (JVs) can do all the business activities mentioned in itsMemorandum of Association. However, there is some prohibited list of business in FDI guidelines which cannot be done by JVs in India. 
2. Normally, JVs are a temporary partnership, established for a definite purpose and for a stipulated period, to fulfill a specific purpose such as accomplishing a task, activity or project. 
3.  FDI in JVs are allowed only in those sectors where 100% foreign investment is permitted under automatic route with no FDI-linked performance conditions. There are certain other conditions also, as specified by Government, which needs to be fulfilled. 
4.  There are some prohibited lists of business in FDI guidelines. It means JVs cannot be engaged in prohibited business activities. 

Therefore, this is an important aspect to be kept in mind before setting up of JVs in India.

 

Conditions required for setting up JVs

 

JVs in India can be formed in 2 ways.

 

•  First in form of new company where both Indian company and foreign company has fixed percentage shareholding or ownership right in new company. This is similar to opening wholly owned subsidiary in India.
• Second way of forming JVs in India is that foreign company can invest in shares of existing Indian company by way of allotment or transfer of shares already allotted.

 

What is the Legal Status of JVs in India?

 

•  Legal status of JVs is Indian Companies.
• A Joint Venture company can be set up as a separate legal entity, distinct from both, the foreign entity & Indian entity.

 

 

What approvals are required for setting up business in form of JVs

 

• For setting up JVsin India, prior approval of ROC/MCA is required. Also, approval of RBI, AD Banker and FIFP may be required in case of government approval route.
•  Further, if the activities of the JVs fall under Government approval route, then the approval from the Government has to be obtained. Government approval can be taken by filing online application with Foreign Investment Facilitation Portal (FIFP)

 

 

Tax Applicability in case of JVs

 

JVs are similar to Indian companies and therefore is liable to tax on global income at different tax rates like 15%, 22%, 25% and 30% depending upon case to case. Also, Subject to MAT @ 15% of book profits.

 

Repatriation of Profits of JVs

 

Profits of JVs can be freely repatriable. For repatriation of profits out of India, there are no restrictions. No approvals required. However, necessary taxes need to be paid in India, also subject to filing of form 15CA and 15CB and fulfillment of some other procedural compliance.

 

Winding up or closure of JVs

 

It is a complex procedure. Also, time consuming. Depend upon exit strategy adopted. Exit can be either by sale of shares or by liquidation. 

 

Thus JVs are very good option for foreign company registration in India where foreign partner and Indian partners collaborate for a common purpose and bring their own expertise, resource, technical knowledge, experience, technology and capital.

Filing of Form 15CA through new Tax Portal

 

Introduction

Income Tax department has introduced new Income Tax Portal for better user interface and with many new features. However, unfortunately, right from inception, it has been facing many glitches which have defeated the very purpose of its introduction. Most of the forms are unable to be filed through new tax portal. 

 

In the same category, are form for remittance of money outside India i.e. Form 15CA and 15CB. Inability to properly file Form 15CA and 15CB has led to frustrations amongst the tax payer and accordingly, from time to time relief has been provided by CBDT in filing such form in manual manner.

Initially, CBDT has allowed filing of Form 15CA and Form 15CB manually till 30^th June 2021 which was further extended to 15^th July 2021; then again date was extended to 15^th August 2021. Although, post 15^th August 2021, the CBDT has resumed electronic filing of such forms, however, practically it has been seen that still users are facing lot of issues in proper filing of Form 15CA and 15CB.

Filing of Form 15CA

It is an online declaration made by the remitter of money confirming that proper taxes has been deducted while making any payment to the Non Resident.

Form 15 CA is required by the banker to confirm that taxes has been paid on amount to be remitted.

 

Further, in few cases, proper certificate of Chartered Accountant in form 15CB is required for uploading form 15CA.

 

There are 4 parts of form 15CA:

 

Part A- If amount of remittance does not exceed Rs 5 lac in a Financial Year and is chargeable to tax.

 

Part B- If amount of remittance exceeds Rs 5 lac in a Financial Year and is chargeable to tax. Also, order has been taken from the AO under section 195(2)/195(3)/197

 

Part C- If amount of remittance exceeds Rs 5 lac in a Financial Year and is chargeable to tax. Also, CA certificate in form 15CB has been obtained.

 

Part D- If remittance is not chargeable to tax.

Submission of Form 15CA

The entire procedure of submission of form 15CA is online.

•  First step is to login into tax portal by using user ID and Password.
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•  Second step is to click on “efile”, then “Income Tax Forms”, then “File Income Tax forms”. Then select Form 15CA
• Third step is to choose relevant part of form 15CA and fill the required details.
•   Fourth step is to verify the details on preview page and then click proceed to e-verify.
• After successful e-verification, message with acknowledgment number will be displayed.
•  In case, part C of form 15CA needs to be filled, first of all, CA need to be added whose digital signature will be used for filing form 15CB.
• For adding CA, on tax portal, first of all, Login to e-filing portal, click on authorized partners, click on My Chartered Accountants, click Add CA, Enter membership number of the CA and click Add
•   After filling relevant details in the form, click Yes to submit the form to CA.
•   CA will submit form 15CB, after which you can either Accept or Reject form 15CA and then click on Submit. For rejecting the form, reason needs to be provided. After accepting the form, further details will be required to be filled.
•   After accepting the form, form needs to be verified using DSC or EVC
• Once form is verified successfully, success message will be displayed with transaction ID and acknowledgement number. Income Tax Return
  

Filing of Form 15CA and 15CB are compulsory for remittance of money abroad, however, it may be noted that till date of this write up, users are facing lot of difficulty in filing form 15CB through new Income Tax Portal although filing of form 15CA has been enabled on the portal.

Income Tax Return: How to reconcile difference in Form-16 and Form 26AS?

One of the common problems faced by the assessee while filing their Income Tax Return, whether, salaried employees or businessmen, is that TDS deducted on their income is not matching with the figures of TDS shown in form 26AS or TDS is not reflecting in form 26AS.

 In the case of salaried employees, their taxes are deducted upfront every month by the employer in the form of Tax Deducted at Source (TDS). Further, the employer is under an obligation to deposit such tax deducted within the prescribed time to the government, file quarterly TDS return for such tax deducted and deposited and issue a certificate to the employee in form 16.

On the basis of such certificate in form 16, the employee can claim credit of taxes excess deposited while filing their respective Income Tax Return in India.

Further, the tax so deposited by an employer is normally reflected on the portal of tax department in the form of form 26AS.

In case of Tax return filing of individual employees, it must be ensured that the figures in form 16 is matching with the figures in form 26AS. Any mismatch in two figures will lead to issuance of notice from tax department.

Therefore, in order to avoid notices from tax department, it is essential to understand the reasons for mismatch in form 16 and form 26AS and how to rectify or reconcile such mismatch before filing ITR.

Reasons for the mismatch between form 16 and form 26AS 

Some of the reasons for mismatch between form 16 and form 26AS are as under:

• Deductor of tax has not deposited the TDS so deducted.
• Deductor has not filed TDS return although TDS has been deposited.
• Clerical mistake in the TDS return like mentioning of wrong PAN of employee, wrong amount, wrong PAN and TAN of deductor, wrong challan identification number of TDS payment, wrong assessment year.
• Wrong TDS amount claimed in the ITR filed.

Reconciling the figures of form 16 and form 26AS 

• In case of mismatch in form 16 and form 26AS, first of all identify the reasons for such mismatch. If the mistake is on part of the employer, inform him about the mistake and ask him to rectify the mistake and file revised TDS return. On the basis of such correction, ITR filing shall be done.
• In case a notice has been issued from the Income Tax Department for TDS credit mismatch, an online reply needs to be submitted after login to the portal. The assessee can choose the option of “Taxpayer is correcting data for Tax Credit Mismatch only” and fill in the relevant details. NRI Taxation in India
  

In order to avoid legal hassles, it is advisable to do periodical checking of form 26AS to see whether TDS deducted by the employer is properly reflecting on the portal. In case it is not so reflected, an employer must be contacted immediately and reasons for such mismatch must be conveyed to employer so that he can make necessary corrections and file a revised TDS return. On the basis of reconciled figures only, an income tax return shall be filed.